Beggar-Thy-Neighbour Activity in 2015

From the The 18th Global Trade Alert Report, voxeu.org.,

Between 1 January and 31 October 2015, a total of 539 measures were taken by governments worldwide that harmed foreign traders, investors, workers, or owners of intellectual property. In no previous year have we found so many trade distortions so quickly (see Figure 5.1). Bearing in mind that our initial totals have tended to be revised up substantially over time, finding so many trade distortions in 2015 so soon is troubling.

5.1

The five most frequently used trade distortions in the year to date are summarised in a pie chart in Figure 5.2. Two-thirds of all trade distortions implemented this year are accounted for by just five types of policy instrument: bailouts/subsidies, trade defence, tariff increases, localisation requirements, and dubious trade finance initiatives.

5.2

2015 saw a resurgence in the resort to subsidies. A total of 170 bailouts and subsidies have been given during the first ten months of this year – almost all of them by G20 governments. These subsidies slow down adjustment in sectors where there is overcapacity, such as aluminium, steel, and shipbuilding. Unlike targeted trade defence measures, bailouts and subsidies tend to distort much more trade as they can alter pricing and investment decisions in foreign as well as home markets. Resort to the second and fourth most commonly used measures – namely, trade defence and localisation requirements – is running at similar levels to last year. In contrast, there has been less resort to tariff increases in 2015 compared to 2014.

T5.1

During 2015 a small number of sectors have borne the brunt of discrimination against foreign firms (see Table 5.2). Ten sectors, accounting together for 45% of world imports, have been hit a total of 625 times. Basic metals have been hit the most this year already (84 times) and this reflects, amongst others, the ongoing difficulties in the steel sector. Agriculture and transportation equipment (the latter being an enormous sector, covering 7.5% of world trade) have both been harmed 76 times since the year began.

The G20 nations are responsible for 443 of the 539 harmful measures implemented this year. As Table 5.1 shows, a ranking of countries in terms of the number of times they have discriminated against foreign commercial interests reveals that the top ten worst nations are all members of the G20.

T5.2

Advertisements

One thought on “Beggar-Thy-Neighbour Activity in 2015

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s